How Does Square Work? The Beginner’s Guide To Square For Small Business
What is Square and how does it work? Read this guide to Square to find out how to set up a Square account, learn about Square fees, and more.
Square’s business model is to be many things to many different types of businesses, but at its core, it is a solution to help businesses manage how they process payments from transactions both online and in-person. In this post, we’ll answer all of your most basic questions about Square for small business, including how Square works.
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What Is Square?
Square is a company that provides payment processing, point of sale software, and a variety of other services to small businesses. It prides itself on its ease of use and affordability as an all-in-one system for retail shops and restaurant owners.
Going one level deeper, think of Square as a credit card processing service that makes it easy for businesses to start accepting card and mobile payments. Merchants can use Square to take mobile credit card payments from their customers and create a seamless selling process from anywhere. Square’s services also include point of sale, inventory, and employee management.
What Is Square’s Business Model?
When businesses use traditional merchant accounts, card payments for goods and services temporarily go into a private merchant account for deposit. Square, on the other hand, pools all of its subscribing users’ accounts into one, big merchant account, which makes it a third-party payment processor. With Square, businesses don’t need to wait for banks to process fees on deposited funds while the merchant account provider holds onto them.
Square is not just about payment processing though. Square’s free POS app helps with the day-to-day of business management, and there are loyalty and payroll apps as well. The Square Cash App was designed to compete with similar services like Venmo. Square Cash App is a peer-to-peer payment service allowing customers to easily pay for products and services from their mobile devices while taking a small fee.
How Much Does It Cost To Use Square?
Square’s rates at a glance vary by the type of transactions businesses are processing. Without breaking out a calculator and crunching numbers, here’s a look at how much Square charges:
- Card-Present Fee For Square For Retail Plus & Square Appointments: 2.5% + $0.10
- Standard Card-Present Fee: 2.6% + $0.10
- Online & Invoiced Transactions: 2.9% + $0.30
- Manually Keyed-In Transactions: 3.5% + $0.15
Per-transaction rates and fees aren’t exactly attractive all on their own to small businesses. Square promises no monthly fees, statement fees, or minimums to help growing businesses remain flexible.
Square’s more advanced software tiers, like Square for Restaurants, Square for Retail, and Square Appointments all have free entry points. Square for Restaurants and Retail start at $60/month for their paid levels and Appointments starts at $29/month per location.
In addition, Square has excellent hardware options. There is a free strip reader for basic payments and a chip reader for $49. Square Terminal, Square’s mobile payment processor, costs $299 and Square Register, an all-in-one POS and processing system, starts at $799.
What Does Square Do? A Quick Guide To Square Products & Services
Square has become much more than just a swipe-based smartphone processing system. The Square business model has evolved, and features like a robust mobile POS app, payroll, inventory and employee management, online store, and email marketing have all come together under Square’s umbrella of business-centric services. A true all-in-one service like that may sound too good to be true, but if you’re wondering “is Square legit?” the answer is yes. Some features are basic, but Square really tries to offer everything a business might need.
There’s a lot to cover when it comes to Square services. In general, though, the list below introduces the product’s most core features:
Is Square Good For Small Businesses?
Square offers an all-in-one system for small businesses including payment processing, point of sale, software, hardware options, and a unique app store, all for upfront, affordable pricing.
For newer small business owners or ones who are looking to simplify their day-to-day operations, Square is a simple option that is highly scalable with no long-term contracts to worry about. It comes with strong customer service and is extremely well-reviewed.
Advantages To Using Square
- Free POS solution: Square Point of Sale is a household name in mobile card payment processing and is a reliable solution that instantly integrates with businesses’ payment processing solutions without stacking on fees or hidden contract clauses.
- Hybrid payment processing: This makes it simpler for up-and-coming businesses to let customers browse online and pay in person. Square accommodates merchants in niche industries, online retailers, and micro-merchants who need payment processing solutions that don’t interrupt their customers’ purchasing experience.
- Transparent pricing: Square has no monthly fees or statements attached. One of Square’s biggest draws is its pricing structure, one that stands in stark contrast to the typical sign-up and application processes that traditional merchant providers require.
Disadvantages To Using Square
- Lost or incomplete sales: These can occur with keyed-in credit card processing attempts that get rejected. Businesses run the risk of losing out on funds that never get successfully processed by Square, which is an implicit disadvantage to using any third-party processor.
- Limited feature set: Some small businesses may need specialized payment processing solutions, and for many higher functions, Square requires a paid subscription.
- Indefinite funding holds: Although the risk of this occurring is small, Square, like most other third-party processors, is able to investigate, freeze, and terminate the funds they process as they see fit. It’s most likely for higher-volume merchants, or high-risk businesses to experience issues with funding holds and investigations; these businesses may want to consider other, more premium payment processing solutions instead.
What Is A Square Account & How Do You Get One?
It can feel like a big decision to become a merchant with Square in lieu of subscribing to a traditional merchant account provider. Thankfully, the process to get on board with a provider like Square is less daunting.
Small business owners who are ready to use Square to process payments can get started by providing a minimal amount of personal info and zero bank statements or proof of revenue. The free POS app and mag stripe mobile credit card reader come ready for use after a business creates a new account.
The entire process takes 10 minutes to get started at the most and there is no credit check or upfront fee to get started. After your account is up, you are ready to start accepting payments immediately. And if you’re still on the fence, Square offers a 30-day free trial to test its software.
Square makes it easy for businesses to add paid services to their accounts through the Square Online Store. Businesses can manage their paid service subscriptions, which require payment methods such as credit cards, through their Square Online account settings.
Here is the quick process to setting up your free account:
- Go to squareup.com and select Get Started
- Select your business type
- Enter your name, social security number, US-based bank account, date of birth, and making address. You also have the option to enter your employee identification number and your business bank account
- Enter your phone number or email address to receive a link
- Tap the link to download the app to your mobile device
Read more about how to set up a Square account.
Is Square The Best Choice For Small Businesses?
Square offers merchants a value that’s hard to beat, especially considering the fact that it’s a third-party processor that lets businesses start using it for free. With Square for small business, a wide range of services allows for flexibility when accepting online and in-person transactions, which is why it’s no wonder Square has thrived on more than just its reputation for reliable mobile card payment processing.
When it comes to ease-of-use, affordable pricing, and a feature set that makes it simpler to create an eCommerce presence, Square is pretty tough to beat. Square may not be the right solution for businesses of all types and sizes, especially larger ones that may need a more advanced portfolio of service and pricing tiers, and there are alternatives to Square, but it provides enough support to make it stand head and shoulders above the competition.